COMMON STOCK PURCHASE AGREEMENT

Exhibit 10.2

      Execution Copy

COMMON STOCK PURCHASE AGREEMENT

KINGSBRIDGE CAPITAL LIMITED

and

SOMAXON PHARMACEUTICALS, INC.

dated as of May 21, 2008

TABLE OF CONTENTS

ARTICLE I DEFINITIONS							1
ARTICLE II PURCHASE AND SALE OF COMMON STOCK							5
		Section 2.1		Purchase and Sale of Stock			5
		Section 2.2		Closing			6
		Section 2.3		Registration Statement and Prospectus			6
		Section 2.4		Warrant			6
		Section 2.5		Blackout Shares			6
ARTICLE III DRAW DOWN TERMS							6
		Section 3.1		Draw Down Notice			6
		Section 3.2		Number of Shares			7
		Section 3.3		Limitation on Draw Downs			7
		Section 3.4		Trading Cushion			7
		Section 3.5		Settlement			7
		Section 3.6		Delivery of Shares; Payment of Draw Down Amount			7
		Section 3.7		Failure to Deliver Shares			7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY							8
		Section 4.1		Organization, Good Standing and Power			8
		Section 4.2		Authorization; Enforcement			9
		Section 4.3		Capitalization			9
		Section 4.4		Issuance of Shares			10
		Section 4.5		No Conflicts			10
		Section 4.6		Commission Documents, Financial Statements			11
		Section 4.7		No Material Adverse Change			11
		Section 4.8		No Undisclosed Liabilities			12
		Section 4.9		No Undisclosed Events or Circumstances			12
		Section 4.10		Actions Pending			12
		Section 4.11		Compliance with Law			12
		Section 4.12		Certain Fees			12
		Section 4.13		Disclosure			13
		Section 4.14		Material Non-Public Information			13
		Section 4.15		Exemption from Registration; Valid Issuances			13
		Section 4.16		No General Solicitation or Advertising in Regard to this Transaction			13
		Section 4.17		No Integrated Offering			13
		Section 4.18		Acknowledgment Regarding Investor’s Purchase of Shares			13
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR							14
		Section 5.1		Organization and Standing of the Investor			14

		Section 5.2		Authorization and Power			14
		Section 5.3		No Conflicts			14
		Section 5.4		Financial Capability			15
		Section 5.5		Information			15
		Section 5.6		Trading Restrictions			15
		Section 5.7		Statutory Underwriter Status			15
		Section 5.8		Not an Affiliate			15
		Section 5.9		Manner of Sale			16
		Section 5.10		Prospectus Delivery			16
ARTICLE VI COVENANTS OF THE COMPANY							16
		Section 6.1		Securities Compliance			16
		Section 6.2		Reservation of Common Stock			16
		Section 6.3		Registration and Listing			16
		Section 6.4		Registration Statement			17
		Section 6.5		Compliance with Laws			17
		Section 6.6		Other Financing			17
		Section 6.7		Prohibited Transactions			18
		Section 6.8		Corporate Existence			19
		Section 6.9		Non-Disclosure of Non-Public Information			19
		Section 6.10		Notice of Certain Events Affecting Registration; Suspension of Right to Request a Draw Down			19
		Section 6.11		Amendments to the Registration Statement			19
		Section 6.12		Prospectus Delivery			20
ARTICLE VII CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN							20
		Section 7.1		Accuracy of the Company’s Representations and Warranties			20
		Section 7.2		Performance by the Company			20
		Section 7.3		Compliance with Law			20
		Section 7.4		Effective Registration Statement			20
		Section 7.5		No Knowledge			21
		Section 7.6		No Suspension			21
		Section 7.7		No Injunction			21
		Section 7.8		No Proceedings or Litigation			21
		Section 7.9		Sufficient Shares Registered for Resale			21
		Section 7.10		Warrant			21
		Section 7.11					21
		Section 7.12		Accuracy of Investor’s Representation and Warranties			22
ARTICLE VIII TERMINATION							22
		Section 8.1		Term			22
		Section 8.2		Other Termination			22
		Section 8.3		Effect of Termination			22

ARTICLE IX INDEMNIFICATION							23
		Section 9.1		Indemnification			23
		Section 9.2		Notification of Claims for Indemnification			24
ARTICLE X MISCELLANEOUS							25
		Section 10.1		Fees and Expenses			25
		Section 10.2		Reporting Entity for the Common Stock			26
		Section 10.3		Brokerage			26
		Section 10.4		Notices			26
		Section 10.5		Assignment			28
		Section 10.6		Amendment; No Waiver			28
		Section 10.7		Entire Agreement			28
		Section 10.8		Severability			28
		Section 10.9		Title and Subtitles			29
		Section 10.10		Counterparts			29
		Section 10.11		Choice of Law			29
		Section 10.12		Specific Enforcement, Consent to Jurisdiction			29
		Section 10.13		Survival			29
		Section 10.14		Publicity			30
		Section 10.15		Further Assurances			30

     This COMMON STOCK PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of the 21st day of May 2008, by and between Kingsbridge Capital Limited, an entity organized and existing under the laws of the British Virgin Islands, whose registered address is Palm Grove House, 2nd Floor, Road Town, Tortola, British Virgin Islands (the “ Investor ”) and Somaxon Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Company ”).

     WHEREAS, the parties desire that, upon the terms and subject to the conditions and limitations set forth herein, the Company may issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to $50 million worth of shares of Common Stock (as defined below); and

     WHEREAS, such investments will be made in reliance upon the provisions of Section 4(2) (“ Section 4(2) ”) and Regulation D (“ Regulation D ”) of the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “ Securities Act ”), and/or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder; and

     WHEREAS, the parties hereto are concurrently entering into a Registration Rights Agreement in the form of Exhibit A hereto (the “ Registration Rights Agreement ”) pursuant to which the Company shall register the Common Stock issued and sold to the Investor under this Agreement and issuable under the Warrant (as defined below), upon the terms and subject to the conditions set forth therein; and

     WHEREAS, in consideration for the Investor’s execution and delivery of, and its performance of its obligations under, this Agreement, the Company is concurrently issuing to the Investor a Warrant in the form of Exhibit B hereto (the “ Warrant ”) pursuant to which the Investor may purchase from the Company up to 165,000 shares of Common Stock, upon the terms and subject to the conditions set forth therein;

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

     As used in this Agreement, the following terms shall have the meanings set forth below:

     “ Alternative Draw Down Amount ” means the product of (i) Average Trading Volume, (ii) the Closing Price on the Trading Day preceding the issuance of the Draw Down Notice, (iii) eight (8), and (iv) the Liquidity Ratio.

     “ Average Trading Volume ” means the average trading volume of the twenty (20) Trading Days during the thirty (30) Trading Days prior to the issuance of the Draw Down Notice that results from excluding the five (5) Trading Days with the highest trading volume and the five (5) Trading Days with the lowest trading volume during such period.

     “ Blackout Amount ” shall have the meaning assigned to such term in the Registration Rights Agreement.

     “ Blackout Shares ” shall have the meaning assigned to such term in the Registration Rights Agreement.

     “ Bylaws ” shall have the meaning assigned to such term in Section 4.3 hereof

     “ Certificate ” shall have the meaning assigned to such term in Section 4.3 hereof.

     “ Closing Date ” shall have the meaning assigned to such term in Section 2.2 hereof.

     “ Closing Price ” as of any particular day shall mean the closing price per share of the Company’s Common Stock as reported by Bloomberg L.P. on such day.

     “ Commission ” means the United States Securities and Exchange Commission.

     “ Commission Documents ” means all reports, schedules, forms, statements and other documents required to be filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act, including filings incorporated by reference therein.

     “ Commitment Period ” means the period commencing on the Effective Date and expiring on the earliest to occur of (i) the date on which the Investor shall have purchased Shares pursuant to this Agreement for an aggregate purchase price equal to the Maximum Commitment Amount, (ii) the date this Agreement is terminated pursuant to Article VIII hereof, and (iii) the date occurring thirty-six (36) months from the Effective Date.

     “ Common Stock ” means the common stock of the Company, par value $0.0001 per share.

     “ Condition Satisfaction Date ” shall have the meaning assigned to such term in Article VII hereof.

     “ Damages ” means any loss, claim, damage, liability, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses and costs and reasonable expenses of expert witnesses and investigation).

     “ Draw Down ” shall have the meaning assigned to such term in Section 3.1 hereof.

     “ Draw Down Amount ” means the actual dollar amount of a Draw Down paid to the Company.

     “ Draw Down Discount Price ” means (i) 88% of the VWAP on any Trading Day during a Draw Down Pricing Period when the VWAP equals or exceeds $1.75 but is less than or equal to $2.50, (ii) 90% of the VWAP on any Trading Day during the Draw Down Pricing Period when VWAP exceeds $2.50 but is less than or equal to $7.75, (iii) 92% of the VWAP on any Trading Day during a Draw Down Pricing Period when the VWAP exceeds $7.75 but is less than or

equal to $10.00, or (iv) 94% of the VWAP on any Trading Day during the Draw Down Pricing Period when VWAP exceeds $10.00.

     “ Draw Down Notice ” shall have the meaning assigned to such term in Section 3.1 hereof.

     “ Draw Down Pricing Period ” shall mean, with respect to each Draw Down, a period of eight (8) consecutive Trading Days beginning on the first Trading Day specified in a Draw Down Notice.

     “ DTC ” shall mean the Depository Trust Company, or any successor thereto.

     “ Effective Date ” means the first Trading Day immediately following the date on which the Registration Statement is declared effective by the Commission.

     “ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “ Excluded Merger or Sale ” shall have the meaning assigned to such term in the Warrant.

     “ FINRA ” means the Financial Industry Regulatory Authority.

     “ Knowledge ” means the actual knowledge of the Company’s Chief Executive Officer and Chief Financial Officer.

     “ Liquidity Ratio ” means fifty percent (50%).

     “ Make Whole Amount ” shall have the meaning specified in Section 3.7.

     “ Market Capitalization ” means, as of any Trading Day, the product of (i) the closing sale price of the Company’s Common Stock as reported by Bloomberg L.P. using the AQR function and (ii) the number of outstanding shares of Common Stock of the Company as reported by Bloomberg L.P. using the DES function.

     “ Material Adverse Effect ” means any effect that is not negated, corrected, cured or otherwise remedied within a reasonable period of time on the business, operations, properties or financial condition of the Company and its consolidated subsidiaries that is material and adverse to the Company and such subsidiaries, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise interfere with the ability of the Company to perform any of its obligations under this Agreement, the Registration Rights Agreement or the Warrant in any material respect; provided, however, that none of the following shall constitute a “ Material Adverse Effect ”: (i) the effects of conditions or events that are generally applicable to the capital, financial, banking or currency markets or the biotechnology or pharmaceutical industries; (ii) the effects of conditions or events that are reasonably expected to occur in the Company’s ordinary course of business (such as, by way of example only, failed clinical trials, serious adverse events involving the Company’s product candidates, delays in product development, unfavorable regulatory determinations, difficulties involving collaborators or intellectual property disputes); (iii) any changes or effects resulting from the announcement or consummation of the transactions contemplated by this Agreement, including, without limitation,

any changes or effects associated with any particular Draw Down, and (iv) changes in the market price of the Common Stock.

     “ Maximum Commitment Amount ” means the lesser of (i) $50 million in aggregate Draw Down Amounts or (ii) 3,672,098 shares of Common Stock (as adjusted for stock splits, stock combinations, stock dividends and recapitalizations that occur on or after the date of this Agreement); provided, however, that in no event will the Maximum Commitment Amount equal or exceed the number of shares of Common Stock which would require shareholder approval under the applicable rules and regulations of the Principal Market.

     “ Maximum Draw Down Amount ” means 2% of the Company’s Market Capitalization at the time of the Draw Down, or, at the Company’s option, the lesser of (A) 3% of the Company’s Market Capitalization at the time of the Draw Down, and (B) the Alternative Draw Down Amount; provided, however, that in no event may the Maximum Draw Down Amount exceed $10 million.

     “ Permitted Transaction ” shall have the meaning assigned to such term in Section 6.6 hereof.

     “ Person ” means any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any government or political subdivision or an agency or instrumentality thereof.

     “ Principal Market ” means the NASDAQ Capital Market, the NASDAQ Global Select Market, the NASDAQ Global Market, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

     “ Prohibited Transaction ” shall have the meaning assigned to such term in Section 6.7 hereof.

     “ Prospectus ” as used in this Agreement means the prospectus in the form included in the Registration Statement, as supplemented from time to time pursuant to Rule 424(b) of the Securities Act.

     “ Qualified Financing ” is any financing conducted by the Company after the Effective Date in which the Company receives at least Twenty-Five Million Dollars ($25,000,000) in funds in exchange for at least Twenty-Five Million Dollars ($25,000,000) in bona fide indebtedness. A Qualified Financing may include, but is not limited to, a financing in which a royalty interest in any of the Company’s products is provided to one or more third parties. .

     “ Registrable Securities ” means (i) the Shares, (ii) the Warrant Shares, and (iii) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (w) the Registration Statement has been declared effective by the Commission and such Registrable Securities have been disposed of pursuant to the Registration Statement, (x) such Registrable Securities have

been sold under circumstances under which all of the applicable conditions of Rule 144 (or any similar provision then in force) under the Securities Act (“ Rule 144 ”) are met, (y) such time as such Registrable Securities have been otherwise transferred to holders who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend or (z) such Registrable Securities may be sold without registration and without any time, volume or manner limitations pursuant to Rule 144(b) (or any similar provision then in effect) under the Securities Act.

     “ Registration Rights Agreement ” shall have the meaning set forth in the recitals of this Agreement.

     “ Registration Statement ” shall have the meaning assigned to such term in the Registration Rights Agreement.

     “ Regulation D ” shall have the meaning set forth in the recitals of this Agreement.

     “ Section 4(2) ” shall have the meaning set forth in the recitals of this Agreement.

     “ Securities Act ” shall have the meaning set forth in the recitals of this Agreement.

     “ Settlement Date ” shall have the meaning assigned to such term in Section 3.5 hereof.

     “ Shares ” means the shares of Common Stock of the Company that are and/or may be purchased hereunder.

     “ Trading Day ” means any day other than a Saturday or a Sunday on which the Principal Market is open for trading in equity securities.

     “ VWAP ” means the volume weighted average price (the aggregate sales price of all trades of Common Stock during each Trading Day divided by the total number of shares of Common Stock traded during such Trading Day) of the Common Stock during any Trading Day as reported by Bloomberg, L.P. using the AQR function.

     “ Warrant ” shall have the meaning set forth in the recitals of this Agreement.

     “ Warrant Shares ” means the shares of Common Stock issuable to the Investor upon exercise of the Warrant.

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK

     Section 2.1 Purchase and Sale of Stock . Upon the terms and subject to the conditions set forth in this Agreement, the Company shall to the extent it elects to make Draw Downs in accordance with Article III hereof, issue and sell to the Investor and the Investor shall purchase Common Stock from the Company for an aggregate (in Draw Down Amounts) of up to the Maximum Commitment Amount, consisting of purchases based on Draw Downs in accordance with Article III hereof.

     Section 2.2 Closing . In consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Company agrees to issue and sell to the Investor, and the Investor agrees to purchase from the Company, that number of the Shares to be issued in connection with each Draw Down. The execution and delivery of this Agreement (the “ Closing ”) shall take place at the offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038 at 5:00 p.m. local time on May 21, 2008, or at such other time and place or on such date as the Investor and the Company may agree upon (the “ Closing Date ”). Each party shall deliver at or prior to the Closing all documents, instruments and writings required to be delivered at the Closing by such party pursuant to this Agreement.

     Section 2.3 Registration Statement and Prospectus . The Company shall prepare and file with the Commission the Registration Statement (including the Prospectus) in accordance with the provisions of the Securities Act and the Registration Rights Agreement.

     Section 2.4 Warrant . On the Closing Date, the Company shall issue and deliver the Warrant to the Investor.

     Section 2.5 Blackout Shares . The Company shall deliver any Blackout Amount or issue and deliver any Blackout Shares to the Investor in accordance with Section 1.1(e) of the Registration Rights Agreement.

ARTICLE III
DRAW DOWN TERMS

     Subject to the satisfaction of the conditions hereinafter set forth in this Agreement, the parties agree as follows:

     Section 3.1 Draw Down Notice . During the Commitment Period, the Company may, in its sole discretion, issue a Draw Down Notice (as hereinafter defined) which shall specify the dollar amount of Shares the Company elects to sell to the Investor (each such election, a “ Draw Down ”) up to a Draw Down Amount equal to the Maximum Draw Down Amount, which Draw Down the Investor shall be obligated to accept. The Company shall inform the Investor in writing by sending a duly completed Draw Down Notice (as hereinafter defined) in the form of Exhibit C hereto by e-mail to the addresses set forth in Section 10.4, as to such Draw Down Amount before commencement of trading on the first Trading Day of the related Draw Down Pricing Period (the “ Draw Down Notice ”). In addition to the Draw Down Amount, each Draw Down Notice shall designate the first Trading Day of the Draw Down Pricing Period. In no event shall any Draw Down Amount exceed the Maximum Draw Down Amount. Each Draw Down Notice shall be accompanied by a certificate, signed by the Chief Executive Officer or Chief Financial Officer , dated as of the date of such Draw Down Notice, in the form of Exhibit D hereof.

     Section 3.2 Number of Shares . Subject to Section 3.6(b), the number of Shares to be issued in connection with each Draw Down shall be equal to the sum of the number of shares issuable on each Trading Day of the Draw Down Pricing Period. The number of shares issuable on a Trading Day during a Draw Down Pricing Period shall be equal to the quotient of one

eighth (1/8th) of the Draw Down Amount divided by the Draw Down Discount Price for such Trading Day.

     Section 3.3 Limitation on Draw Downs . Only one Draw Down shall be permitted for each Draw Down Pricing Period.

     Section 3.4 Trading Cushion . Unless the parties agree in writing otherwise, there shall be a minimum of three (3) Trading Days between the expiration of any Draw Down Pricing Period and the beginning of the next succeeding Draw Down Pricing Period.

     Section 3.5 Settlement . The number of Shares purchased by the Investor in any Draw Down shall be determined and settled on two separate dates. Shares purchased by the Investor during the first four Trading Days of any Draw Down Pricing Period shall be determined and settled no later than the sixth Trading Day of such Draw Down Pricing Period. Shares purchased by the Investor during the second four Trading Days of any Draw Down Pricing Period shall be determined and settled no later than the second Trading Day after the last Trading Day of such Draw Down Pricing Period. Each date on which settlement of the purchase and sale of Shares occurs hereunder being referred to as a “ Settlement Date .” The Investor shall provide the Company with delivery instructions for the Shares to be issued at each Settlement Date at least two Trading Days in advance of such Settlement Date. The number of Shares actually issued shall be rounded down to the nearest whole number of Shares.

     Section 3.6 Delivery of Shares; Payment of Draw Down Amount .

          (a) On each Settlement Date, the Company shall deliver the Shares purchased by the Investor to the Investor or its designees exclusively via book-entry through the DTC to an account designated by the Investor, and upon receipt of the Shares, the Investor shall cause payment thereof to be made to the Company’s designated account by wire transfer of immediately available funds, if the Shares are received by the Investor no later than 1:00 p.m. (Eastern Time), or next day available funds, if the Shares are received thereafter.

          (b) For each Trading Day during a Draw Down Pricing Period where the VWAP is less than the greater of (i) 90% of the Closing Price of the Company’s Common Stock on the Trading Day immediately preceding the commencement of such Draw Down Pricing Period, or (ii) $1.75, such Trading Day shall not be used in calculating the number of Shares to be issued in connection with such Draw Down, and the Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced by one eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice. If trading in the Company’s Common Stock is suspended for any reason for more than three (3) consecutive or non-consecutive hours during any Trading Day during a Draw Down Pricing Period, such Trading Day shall not be used in calculating the number of Shares to be issued in connection with such Draw Down, and the Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced by one eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice.

     Section 3.7 Failure to Deliver Shares . If on any Settlement Date, the Company fails to cause the delivery of the Shares purchased by the Investor, and such failure is not cured within two (2) Trading Days following such Settlement Date, the Company shall pay to the Investor on

demand in cash by wire transfer of immediately available funds to an account designated by the Investor the “ Make Whole Amount ;” provided, however, that in the event that the Company is prevented from delivering Shares in respect of any such Settlement Date in a timely manner by any fact or circumstance that is not reasonably within the control of, or directly attributable to, the Company, or is otherwise reasonably within the control of, or directly attributable to, the Investor, then such two (2) Trading Day period shall be automatically extended until such time as such fact or circumstance is cured. As used herein, the Make Whole Amount shall be an amount equal to the sum of (i) the Draw Down Amount actually paid by the Investor in respect of such Shares plus (ii) an amount equal to the actual loss suffered by the Investor in respect of sales to subsequent purchasers, pursuant to transactions entered into before the Settlement Date, of the Shares that were required to be delivered by the Company, which shall be based upon documentation reasonably satisfactory to the Company demonstrating the difference (if greater than zero) between (A) the price per share paid by the Investor to purchase such number of shares of Common Stock necessary for the Investor to meet its share delivery obligations to such subsequent purchasers minus (B) the average Draw Down Discount Price during the applicable Draw Down Pricing Period. In the event that the Make Whole Amount is not paid within two (2) Trading Days following a demand therefor from the Investor, the Make Whole Amount shall accrue interest per annum compounded daily at a rate equal to the greater of (i) the prime rate of interest then in effect as published by the Wall Street Journal plus three percent (3%) and (ii) ten percent (10%) up to and including the date on which the Make Whole Amount is actually paid. For the purposes of this Section 3.7 facts or circumstances that are reasonably within the control of the Company include such facts and circumstances solely attributable to acts or omissions of the Company, its officers, directors, employees, agents and representatives, including, without limitation, any transfer agent(s), accountant(s) and/or attorney(s) engaged by the Company in connection with the Company’s performance of its obligations hereunder. Notwithstanding anything to the contrary set forth in this Agreement, in the event that the Company pays the Make Whole Amount (plus interest, if applicable) in respect of any Settlement Date in accordance with this Section 3.7, such payment shall be the Investor’s sole remedy in respect of the Company’s failure to deliver Shares in respect of such Settlement Date, and the Company shall not be obligated to deliver such Shares.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby makes the following representations and warranties to the Investor:

     Section 4.1 Organization, Good Standing and Power . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. Except as set forth in the Commission Documents (as defined below), the Company does not own more than fifty percent (50%) of the outstanding capital stock of or control any other business entity, other than any wholly-owned subsidiary that is not “ significant ” within the meaning of Regulation S-X promulgated by the Commission. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure to be so qualified or be in good standing would not have a Material Adverse Effect.

     Section 4.2 Authorization; Enforcement . (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Registration Rights Agreement and the Warrant and to issue the Shares, the Warrant, the Warrant Shares and any Blackout Shares (except to the extent that the number of Blackout Shares required to be issued exceeds the number of authorized shares of Common Stock under the Certificate); (ii) the execution and delivery of this Agreement and the Registration Rights Agreement, and the execution, issuance and delivery of the Warrant, by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required (other than as contemplated by Section 6.5); and (iii) each of this Agreement and the Registration Rights Agreement has been duly executed and delivered, and the Warrant has been duly executed, issued and delivered, by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (A) as such enforceability may be limited by applicable bankruptcy, securities, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies; (B) to the extent that provisions relating to indemnification or equitable remedies may be restricted or limited by applicable law, and (C) as affected by other equitable principles of general application.

     Section 4.3 Capitalization . The authorized capital stock of the Company and the shares thereof issued and outstanding as of December 31, 2007 are set forth in the Commission Documents. All of the outstanding shares of the Common Stock have been duly and validly authorized and issued, and are fully paid and non-assessable. Except as set forth in this Agreement or in the Commission Documents, as of December 31, 2007, no shares of Common Stock were entitled to preemptive rights or registration rights and there were no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for or giving any right to subscribe for, any shares of capital stock of the Company, except for stock options issued by the Company to its employees, directors and consultants. Except as set forth in this Agreement or in the Commission Documents, as of December 31, 2007, there were no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock of the Company. Except as described in the Commission Documents or as previously disclosed to the Investor on a schedule previously delivered to the Investor (the “ Disclosure Schedule ”, as of the date hereof the Company is not a party to any agreement granting registration rights to any Person with respect to any of its equity or debt securities. Except as set forth in the Commission Documents, or as previously disclosed to the Investor in writing, as of the date hereof the Company is not a party to, and it has no Knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company. The offer and sale of all capital stock, convertible securities, rights, warrants, or options of the Company issued during the twenty-four month period immediately prior to the Closing complied in all material respects with all applicable federal and state securities laws, and no stockholder has a right of rescission or damages with respect thereto that would have a Material Adverse Effect. The Company has furnished or made available to the Investor true and correct copies of the Company’s Amended and Restated Certificate of Incorporation, as amended and in effect on the date hereof (the

“ Certificate ”), and the Company’s Amended and Restated Bylaws, as amended and in effect on the date hereof (the “ Bylaws ”).

     Section 4.4 Issuance of Shares . Subject to Section 6.5, the Shares, the Warrant and the Warrant Shares have been, and any Blackout Shares will be, duly authorized by all necessary corporate action (except to the extent that the number of Blackout Shares required to be issued exceeds the number of authorized shares of Common Stock under the Certificate) and, when issued and paid for in accordance with the terms of this Agreement, the Registration Rights Agreement and the Warrant, and subject to, and in reliance on, the representations, warranties and covenants made herein by the Investor, the Shares and the Warrant Shares shall be validly issued and outstanding, fully paid and non-assessable, and the Investor shall be entitled to all rights accorded to a holder of shares of Common Stock.

     Section 4.5 No Conflicts . The execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Warrant and any other document or instrument contemplated hereby or thereby, by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and shall not, in any material respect: (i) result in the violation of any provision of the Certificate or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party that has not been waived, where such default or conflict would constitute a Material Adverse Effect, (iii) create or impose a lien, charge or encumbrance on any property of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound which would constitute a Material Adverse Effect, (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, writ, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected where such violation would constitute a Material Adverse Effect, or (v) require any consent of any third-party that has not been obtained pursuant to any material contract to which the Company is subject or to which any of its assets, operations or management may be subject where the failure to obtain any such consent would constitute a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, the Registration Rights Agreement or the Warrant, or issue and sell the Shares, the Warrant Shares or the Blackout Shares (except to the extent that the number of Blackout Shares required to be issued exceeds the number of authorized shares of Common Stock under the Certificate) in accordance with the terms hereof and thereof (other than any filings that may be required to be made by the Company with the Commission, the FINRA/NASDAQ or state securities commissions subsequent to the Closing, and, any registration statement (including any amendment or supplement thereto) or any other filing or consent which may be filed pursuant to this Agreement, the Registration Rights Agreement or the Warrant); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Investor herein.

     Section 4.6 Commission Documents, Financial Statements .

          (a) The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and since April 1, 2007 the Company has timely filed all Commission Documents. Except as previously disclosed to the Investor in writing, since April 1, 2007 the Company has maintained all requirements for the continued listing or quotation of its Common Stock, and such Common Stock is currently listed or quoted on the NASDAQ Global Market. To the extent not available on the Commission’s EDGAR filing system, the Company has made available to the Investor true and complete copies of the Commission Documents filed with the Commission since April 1, 2007 and prior to the Closing Date. The Company has not provided to the Investor any information which, according to applicable law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement. As of its date, the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to such document, and, as of its date, after giving effect to the information disclosed and incorporated by reference therein, to the Company’s Knowledge such Annual Report on Form 10-K did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, to the Company’s Knowledge the financial statements, together with the related notes and schedules thereto, of the Company included in the Commission Documents filed with the Commission since April 1, 2007 complied as to form in all material respects with all applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements, together with the related notes and schedules thereto, have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial condition of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

          (b) The Company has timely filed with the Commission and made available to the Investor via EDGAR or otherwise all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 (“ SOXA ”)) with respect to all relevant Commission Documents. The Company is in compliance in all material respects with the provisions of SOXA applicable to it as of the date hereof. The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act.

     Section 4.7 No Material Adverse Change . Except as disclosed in the Commission Documents or a press release of the Company, since December 31, 2007 no event or series of events has or have occurred that would, individually or in the aggregate, have a Material Adverse Effect on the Company.

     Section 4.8 No Undisclosed Liabilities . To the Company’s Knowledge, neither the Company nor any of its subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of the Company or any subsidiary (including the notes thereto) in conformity with GAAP and are not disclosed in the Commission Documents, other than those incurred in the ordinary course of the Company’s or its subsidiaries respective businesses since December 31, 2007 or which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company.

     Section 4.9 No Undisclosed Events or Circumstances . Except as previously disclosed to the Investor in writing, to the Company’s Knowledge, no event or circumstance has occurred or exists with respect to the Company or its subsidiaries or their respective businesses, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed and which, individually or in the aggregate, would have a Material Adverse Effect on the Company.

     Section 4.10 Actions Pending . There is no action, suit, claim, investigation or proceeding pending or, to the Knowledge of the Company, threatened against the Company or any subsidiary which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be taken pursuant hereto or thereto. Except as set forth in the Commission Documents or in the Disclosure Schedule, there is no action, suit, claim, investigation or proceeding pending or, to the Knowledge of the Company, threatened, against or involving the Company, any subsidiary or any of their respective properties or assets, or to the Knowledge of the Company involving any officers or directors, in their capacity as officers or directors, of the Company or any of its subsidiaries, including, without limitation, any securities class action lawsuit or stockholder derivative lawsuit, that would be reasonably expected to have a Material Adverse Effect on the Company. Except as set forth in the Commission Documents or as previously disclosed to the Investor in writing, no judgment, order, writ, injunction or decree or award has been issued by or, to the Knowledge of the Company, requested of any court, arbitrator or governmental agency which would be reasonably expected to result in a Material Adverse Effect.

     Section 4.11 Compliance with Law . The business of the Company and its subsidiaries have been and are presently being conducted in accordance with all applicable federal, state, local and foreign (if applicable) governmental laws, rules, regulations and ordinances, except as set forth in